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        Mar 24 2020

        (Podcast) Leadership Series: A Conversation with Healthcare Entrepreneur, Stan Lapidus

        Picture of ZAGENO Team
        By ZAGENO Team

        Our guest is Stan Lapidus, a successful serial entrepreneur focused on the medical and life sciences industry.

        Over the past 30 years, Stan has founded and led four different medical start-ups. 

        • Founded in 1987, Cytyc Corp. revolutionized early detection of cervical cancer through the development of the modern Pap test.
        • Founded in 1995, EXACT Sciences revolutionized early detection of colorectal cancer with its FDA-approved non-invasive test, Cologuard
        • Founded in 2003, Helicos BioSciences was the first company to develop a system to sequence individual, single molecules of DNA and sequenced the first human genome using single molecule methods.  
        • In 2009, is SynapDx began development of novel laboratory tests for autism and other developmental disorders in children.

        Stan was also an instructor at MIT where he taught courses in the design and conduct of clinical trials and in critical reading of the scientific literature. Stan holds 37 patents. For his work in the early detection of cancer, he was elected as a Fellow of the American Institute for Medical and Biological Engineering in 2014.

        Today, he serves as board chairman of three companies and as a board member of three other companies.

         

        Our podcast, THIS IS ZAGENO is now available on a variety of audio streaming services, like TuneInSpotifySoundCloudBuzzSprout, and Apple Podcasts.

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        CUSTOMER EXOPERIENCEA

         

        Transcript

        Stan, just to be clear you’re not ZAGENO partner, customer or an investor but you were introduced to our business by one of my colleagues and something about our mission resonated with you, which ultimately led to this conversation.... so, we are grateful for your time in speaking with us.

        You have described a 40-year career as an inventor/founder with 30 of those being focused on “tough tech.” Could you describe the value proposition you’ve established for healthcare start-ups and what makes healthcare (versus technology) particularly tough?

        Thank you for the introduction. I've been drawn to tough problems in medicine really since the 1980s. It's an opportunity for me, as an individual, to make a contribution and it would be great to be able to find easy ways to do this. But I'm not smart enough to have done that so I've worked on projects, started companies which take years, decades to come to fruition. 

        The differences between the world of tech and the world of healthcare are I think the most important one is the ability to have impact, the ability to be able to say, at the end of the day, I played a role saving lives, reducing misery and making healthcare more available. Those are the things that all of us in healthcare, any part of the system should feel good about. 

        The thing I did immediately, before founding Cytyc, my main job, the company's job was to put Detroit factory workers out of business - making America more productive, not especially gratifying. The technical problems were interesting but it had little emotional satisfaction. 

        The business, however, of medicine, the business of healthcare is high risk. If we're developing new products to address disease states, health states that were previously unaddressed, the chances that we'll fail is high. If we succeed, there are excellent chances that the solutions will be durable because the regulatory process that both raises a barrier, once you're on the other side of that barrier, gives you essentially a monopoly and that's the businessman in me speaking.

        So it's hard, but the opportunity to build something that has impact over a long period of time is great and that's been the motivator - my motivator and the motivator of my colleagues, the people I've worked with most closely over the last decades. 

         

        I'd like to ask you about the knock on effect that disruption can have from new ideas.

        You've attributed the success of promoting the modern Pap test as a combination of buy-in from young physicians and raising awareness of legal and book patients associated with misdiagnosis from older screening methods.

        You've also described this successful roll out and acceptance of Cologuard, for the early detection of colon cancer, as 1) displacing colonoscopies for screening and 2) leading a decline in the number of fellows focusing on gastroenterology as a sub specialty.

        Here's the question. Were these disruptions strategically planned or were they welcomed but unintended consequences? 

        The clear goal that we had and starting EXACT (Sciences) was reducing mortality from colorectal cancer through early detection. At the time I started the company, which was many years ago now - in 1995 - screening colonoscopy was not yet adopted. What did exist was a poor test called fecal occult blood testing. Very poor sensitivity and specificity. Not much better than tossing a coin.

        My target was to displace it and not just displacement, but increase the utilization of screening so everyone was covered. In those years, there was a shortage of gastroenterologists because the procedures that they could do to make money were on the decline.

        Over the years we were developing the EXACT test screening, colonoscopy rose and had a material impact on mortality from colorectal cancer. But at no time have more than 40% of people gotten required colonoscopies. And the reason is it's an inhumane miserable procedure. It takes a lot of motivation to do this. And one of the rules of screening is (that a) screening test should be easy and represent little burden on the patients.

        So our goal was to reduce mortality. Our goal was to displace the discomfort, the loss of a day of work, the loss of income associated with colonoscopy. As it turned out, colonoscopy did become a standard. And by the time the FDA, approved the test, 19 years after we started, many physicians had become gastroenterologists in order to garner million dollar a year income. This isn't a good use of resource and this is, alas, a cynical view of medicine.

        So a byproduct of what we've done is change the choices that young trainees make as far as their medical specialties go and have directed...caused gastroenterologists to seek other areas to provide their base income. I'm very proud of this. I'm proud of the impact we've had on lives and I'm proud of the impact we've had on physician displacement so that in the future "gastros" will do things better then what exact testing can do in areas of medicine that differ. 

         

        In your opinion, how does an ability to disrupt rate in your evaluation of healthcare startup opportunities? 

        For me... so disruption is a tech word, and the cognate in healthcare is saving lives, reducing morbidity, and to an extent, saving costs, but it's really about saving lives and reducing morbidity. For me, it's the only thing I think about. In each of the medical startups I've done  -the three which are Cytyc, EXACT and SynapDx - the motivator, the hiring, the messaging, the fundraising, the team building was all built around: “we save lives”, “we reduce morbidity.”  

        To hold up a mirror to your own business, if it's hard to raise money, maybe it's because you're not disruptive enough. You can never do better than the promise of disruption that you create, you can only do worse. If you're incremental, that's a good thing for a large company to do. If you're thinking in terms of a startup, your value proposition in healthcare, your lives saved, reduction of morbidity needs to be profound.

        If you're thinking in terms of a startup, your value proposition in healthcare, your lives saved, reduction of morbidity needs to be profound.

        In the 30 years of your tough tech career, how many scientists would you estimate have been under your management? And as a followup question, what percentage of those scientists have been lab based?

        So it varies in each company. The answer is hundreds of scientists. The ratio of engineers to scientists varies. At Cytyc it was probably 2/3rd engineers, with many spending much time in the lab, 1/3rd traditional lab people. At EXACT, all were traditional lab people. At Helicos (BioSciences), we had an interesting mix of physicists, synthetic organic chemists (who spent all their time in the lab), biologists, molecular biologists, chemists… so it was a very eclectic group of scientists with...call it... 50% lab based lab time. And it's SnapDx, everyone was either a wet scientist or a data scientist

         

        Listening to you, one could easily assume that you are a person of science, someone with a formal academic background in medicine, but you're very clear to point out that you are an engineer, an inventor and founder. Over your career, working with scientists what perspective were you able to bring to their problem solving time and time again?

        As an engineer, my interests, my technical interests lie in invention using known principles of physics and biology to come up with new ideas. Scientists discover those new ideas. So I'm not a scientist, I'm not a discoverer, but I love being part of teams in which discovery plays a central role. 

        The teams that I built, the companies that I found it have all been based on the idea of translating science, as it's commonly said, from bench to bedside... maybe starting with an interesting discovery or invention of our own or papers published by others and developing technology and building a delivery vehicle to improve the quality of life of mankind. 

        The thing I've learned as an outsider to respect, admire and therefore to encourage is critical thinking about experimental results. Much of the literature today is full of papers in which you know 10,000 variables are used to find biomarkers on 50 patients for cancer, not cancer infection or no infection, liver failure, no liver failure.

        It's not remarkable that these studies never replicate. Broadly, it's called a replication crisis. 

        In diagnostics it's acute because the availability of omex technology always means you have more variables than patients. This places a real importance on critically thinking about bench experiment design and being sure that other explanations have been thoroughly accounted for for apparently remarkable results. And the same is true for clinical science that getting a small pilot study, you know, 10 patients or a hundred patients that produces again seemingly remarkable results.

        So, it's important to understand what the limitations are is those results are extrapolated to registration trials, prospectively conducted trials in which patients are not pre-selected. Again and again for things that have worked out and not worked out, those critical thinking skills on the part of our scientific teams that our clinical teams have made the difference.

         

        I just want to switch gears here and talk about the investment side of this story. For healthcare investments, you talk about the importance of telling the good story and the opportunity to, as you said earlier, save a life, reduce pain, and save money for the system.

        As someone with considerable firsthand knowledge of the intersection between healthcare investments and scientist’s time, what steps have you taken to help scientists achieve faster time to milestones and otherwise protect them from unnecessary administrative burdens? 

        The companies I've raised have had burn rates between two and a half million dollars a year in the early days at Cytyc to $10 million a year and at Helicos, so it's anywhere between $10,000 and $40,000 a day. That's the burn of the whole company. 

        That is the correct way to think about the time value of money is how much did you spend yesterday and what did you get done yesterday? It's both the granular view, but a view that crystallizes, helps people crystallize what they're working on. Very often time spent saving money costs more money than it saves. So I try to hold a mirror up to my team members to ask them if they're spending their time well, because whether they're spending it well or not, where the meter was clicking, it's $10,000 a day. It's $40,000 a day at a biotech and at a biopharma it might be $100,000 a day. 

        I try to hold a mirror up to my team members to ask them if they're spending their time well, because whether they're spending it well or not, where the meter was clicking, it's $10,000 a day. It's $40,000 a day at a biotech and at a biopharma it might be $100,000 a day. 

        As I think about the non-science or these semi scientific tests that scientists, that have been part of my teams do, I break them into three buckets. The first is documentation/meeting and tools to automate notebooks and stuff have become available and have reduced the burden, but there's a fundamental burden, which is planning experiments, conducting them the bench science and analyzing the results and by documenting them very often what results is the analysis of the results - the documentation is the analysis. Taking those results and discussing them at a lab meeting is a process that I view as the most important, the most valuable part of doing industrial science is sharing results with colleagues and critically thinking about them. The third is the process of hiring and the point is you can't conduct good science without a good team and only scientists can hire other scientists.

        I think it's very important for people to be broadly interviewed in the company for candidates at any level, whether they are lab techs or whether they're executive vice presidents to do presentations to the team, to have the team interact and to observe how that interaction goes. 

        The third element, which is how ZAGENO and I got together, is the business of purchasing. So in an engineering company, purchasing can be offloaded onto purchasing people, supply chain executives, purchasing agents as they used to be called, who can purchase a hundred integrated circuits, 40 microprocessor chips for you, and that process is largely on autopilot from the engineer's perspective. 

        In small startups where the experiment design is dictated by the supplies and the instruments that you use, a lot of time is spent on purchasing and a lot of that time is spent on the minutia of purchasing.

        In small startups where the experiment design is dictated by the supplies and the instruments that you use, a lot of time is spent on purchasing and a lot of that time is spent on the minutia of purchasing - reviewing the range of supplies, making considered judgments about this versus that; it often means looking at spec sheets. It's a process that hasn't changed in the 30+ years I've been doing this. It's really the most refractory to change.

         

        You have calculated a value proposition from your experience with ZAGENO. In it, you evaluate the daily burn for startups with scientists. And you touched on this a bit earlier, can you speak to the disruptive nature of a marketplace for scientists and how it could impact capital efficiency and ultimately contribute to reducing scientist's time to milestone?

        So, after your colleague Natalie Bartlett reached out to me, I spent some time on the ZAGENO website and reconstructed some of the searches I personally did for supplies and equipment. 

        And I think about it this way... my team members, the wet scientists, the scientists who are in the lab, you know who start with an experiment design, conduct the experiment and end up with a write-up in a lab prep presentation or the lab meeting, spend about half a day to a day a week on purchasing related activities. And that's broadly, that's making science informed selections, going through catalogs, whether they're online or in paper, evaluating, discussing, following the procurement.

        That pipeline is a half a day to a day a week pretty much for everyone who worked in the lab. If we can move a program ahead by half a day to a day a week faster, that would be ideal. I don't think we can. I think, however, what ZAGENO addresses is maybe a third to half of that. Again, this based on my own experience. This is the mechanics of finding stuff and placing orders, not the larger question of thinking through what are the supplies I need and what are the things that I hope I can find online. 

        So, I guess an online marketplace can reduce time spent in purchasing related activities by half to a third. When we're talking about companies that are spending $10,000 a day to $40,000 a day. And this is on the critical path. This is real savings. Real savings means real productivity and that matters a great deal.

        ...an online marketplace can reduce time spent in purchasing related activities by half to a third... And this is on the critical path. This is real savings. Real savings means real productivity and that matters a great deal.

        My last question is a topical one because this interview is taking place amidst the social distancing of COVID-19. The first question is what are your general impressions and how do you believe innovation could play a role in our path forward?

        So, public officials have rightly looked at the quality of tools available to them to diagnose, to prevent and to treat. They have concluded that the tools are inadequate and have put it in measures that inevitably will have great harm to us, to our society. It will be for others to decide if the decisions made are proportionate or disproportionate to the risks. On the one hand, this is not the plague. On the other hand it is clear that in major cities, resources are being taxed to the limit in emergency rooms, in ICUs. 

        This is a serious crisis, no matter what one's view is, but the problem isn't going to be solved by public health measures like social distancing. In the end for the problem to be solved either need to be effective diagnostics, prophylactics or therapies or just recognize that herd immunity will require people to die; that all of us will ultimately be exposed perhaps at a slower rate and some of us will die from the disorder.

        This is a very grim future. Economic disruption, high infection rates, which are inevitable before herd immunity is achieved and can only be modified by what we do as scientists, engineers, physicians, and public health officials. 

        Speed matters, speed matters, and saving lives and speed matters in avoiding destruction of the society that has taken civil society that it's taken us so long to build as one looks at companies, which are actually the companies where the forefront of these, they all say speed matters, regulatory process matters, conducting good science rapidly matters, and this really places an emphasis on the kind of things that ZAGENO is doing to help speed the process along. Nothing I've said about the speed of purchasing is changed by coronavirus except it's made more acute.

        ...they all say speed matters, regulatory process matters, conducting good science rapidly matters, and this really places an emphasis on the kind of things that ZAGENO is doing to help speed the process along.

        Stan, this has been a fascinating discussion, such great insight. Thank you very much for spending some time with us, today. 

        I enjoyed speaking with you.

        Topics: Research scientists, marketplace, COVID-19, leadership, Cologuard, disruption

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